The company’s financial performance has taken a stunning U-turn. By early 2025, the manufacturer was announcing falling profits and a decline in automotive sales. The homegrown electric vehicle manufacturer recently experienced a major downturn in sales. This dropoff came at the same time as mounting backlash against CEO Elon Musk for his political interference. Unfortunately, this perfect storm of multiple factors has spurred fears as to how the company is going to perform in coming quarters.
In the first quarter of 2025, Tesla was looking at a shocking 70% decline in profits. It was one of the most difficult times in the company’s history. Automotive revenues fell 20% year-over-year. This decrease reflects a broader trend of decreasing sales and dwindling consumer enthusiasm. Meanwhile, this quarter median car sales fell to their lowest level in three years. As a consequence, analysts are preparing for “rock-bottom” projections for Tesla’s quarterly results.
At market close on Tuesday, Tesla’s stock was down nearly 37% on the year. The company was under enormous pressure to solve the ongoing sales slump. In answer, it dramatically cut vehicle cost to appeal buyers back into the showrooms. Despite these concessions, Tesla reported revenue figures that fell short of analysts’ expectations, coming in at less than $21.1 billion.
Sales and profits have fallen off a cliff. This is particularly acute now due to the backlash Musk is facing from his political engagement. He most recently led Trump’s Department of Government Efficiency (DOGE) initiative. The second plan was designed to cut federal spending and reduce the size of the government workforce. Musk’s contributions exceeding a quarter of a billion dollars towards Trump’s reelection campaign have further fueled protests and boycotts of Tesla around the globe.
Given such trends, Tesla wisely recognized that shifting political winds could affect product demand.
“This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term.” – Tesla
Despite the bad news on the financial front, Tesla’s stock was relatively stable in after-hours trading immediately following the announcement. So analysts are continuing to play it safe. They’re already starting to measure the effects of Musk’s rightward turn on consumers’ perception of and companies’ long-term success.